Retailers take aim

The sports marketing strategies of retail companies used to be driven by their
vendors — manufacturers. The manufacturers — whether a Gillette or a
ConAgra or a Black & Decker — would buy a sponsorship and involve the
retailer in a promotion via pass-through rights.

About 10 years ago, more retailers began to take the manufacturers’ role,
turning the tables on manufacturers by buying their own sponsorships and involving
manufacturers in ways — and on schedules — that better suited the retailer.

Today, retail companies are more involved than ever as sports sponsors, not just
co-op partners, and they’re calling the shots with vendors to an unprecedented
degree. Even when they’re not the lead dog in the promotional relationship,
they may still demand a fuller range of assets from the vendor, not merely the
same promotion the vendor did with another chain the week before.

In some cases, the retailer is even playing the vendor role, such as the Wisconsin-based
department store chain that had its own brand of sportswear built around Green
Bay Packers players.

In all, retailers have taken stock of their established brands, geographical reach
and key position in the product pipeline to solidify their position in the sponsorship
world.

Gaining leverage

In some cases — Wal-Mart being the most prominent — the most desirable
retailers are selling co-op positions and turning the sponsorship itself into
a revenue source.

“Retailers are saying, ‘My margins are getting squeezed, we’re
only making a 1 or 2 percent margin, and I’ve got to find revenue elsewhere.
If I go buy my own sponsorship, I can turn around and sell positions in these
sponsorships. It’s a complete opposite model,’” said Reid Stewart,
a vice president at Momentum Worldwide, whose clients include Gillette, ConAgra
and Home Depot.

The practice was already part of the grocery industry 10 years ago, but the
past few years have seen mass merchants and home-improvement retailers get involved.

Why the shift?

“They’ve seen the value of those relationships increase as they’ve
been exposed to them, but also, I think they are looking for control of consistency
at retail with one promotion going on in the shelves as opposed to having two
or three or five different ones,” said Greg Busch, director of sports marketing
at GMR Marketing, who was formerly a marketer at power tool manufacturer Porter-Cable.

Retailers also are leveraging their unique position in the data-compilation
equation. “Obviously they have a lot of capabilities to track traffic and
transactions, and in a lot of cases can build systems to [measure the results
of promotions],” Busch said. “And in the case of packaged goods, you’re
a little more at the discretion of the retailer and scanning data and whether
you can actually build the infrastructure to tie sales directly to a sponsorship.”

At Wal-Mart, the sponsorship power of the retailer is in full force. Company
marketers did not return requests for comment, but other marketers describe
with awe Wal-Mart’s leverage

in commanding low-six-figure participation
fees in its NASCAR and FLW bass-fishing programs. Wal-Mart is famous for being
rugged with vendors; sponsorship is just one facet of this.

Even where retailers aren’t demanding money for co-op positions, they’re
demanding programs catered to their needs. Especially in the grocery category,
chains aren’t settling for the same promotion done at their competitor
the week before.

“At most you used to give them a different week of media,” said Stewart.
“One week Albertsons, one Kroger. Now it’s either ‘Give me my
own customized promotion’ or even ‘Customize my own sponsorship.’”

Stewart said a recent Gillette program with Stop & Shop involved an honorary
team captain program and game ticket giveaways that were exclusive to Stop &
Shop.

The home-improvement and home-electronics segments have been slower than the
groceries and mass merchants to assert this strength, marketers say. There are
at least two reasons. One is a greater aversion to promotional clutter, the
other is that the marketing and the “retail environment” departments
are distinct at many retailers and have different aims.

“The retail guy has done a lot of research to see that the consumer only
looks in five places, and so he wants to avoid clutter, but the sponsorship
guy wants to activate in as many places as he can,” Stewart said. “We’re
doing NASCAR-themed planning at Circuit City, and it’s very limited as
to how we can promote in-store.”

Wal-Mart has focused some of its muscle on its “retailtainment” strategy,
which includes “Fan Days,” such as the NASCAR-themed days going on
simultaneously around the country and involving interactive events and displays
that go well beyond cardboard point-of-purchase displays. The company leverages
these to liquidate its sponsorship fees, and makes it clear to vendors that
these are the way to get superior results.

“Wal-Mart winked at Gillette and said, ‘You’ll get better performance
if you do our special days,’” Stewart said.

Stewart is surprised more chains haven’t got into the “retailtainment”
idea.

“Wal-Mart is saying, we don’t just want a one-way communication with
the customer, we want an in-store experience that’s a little more dynamic,”
he said.

Brand building

Not every retail chain has the market strength or management skill to draw co-op
payments from vendors. But retailers now find sponsorship more valuable for
a less tangible reason: branding. As they’ve seen manufacturers benefit
from long associations with sports properties, they’ve begun to follow
suit.

“Establishing what the brand represents is a bigger part of the overall
message that already includes price competition,” said David Paro, president
of Deep Alliance Marketing, a former McDonald’s sports marketer who also
serviced retailers at agencies SFX and Frankel.

Chains such as Wal-Mart, Target and Kmart are working extremely hard to develop
distinct marketplace images, “so matching up with sports and event properties
is more of a natural thing,” Paro said.

This search for “personality” is driving another trend, some say:
Retailers are increasingly involved in cause-related marketing. It’s one
reason why Gallery Furniture shifted some of its marketing dollars last season
to the Houston Texans, with whom it is doing several cause-related programs.
And on Jan. 31, Gallery Furniture is sponsoring a tennis exhibition at the Toyota
Center with John McEnroe, Jim Courier, Anna Kournikova and other luminaries
to aid victims of the Southeast Asian tsunami.

“The Rockets let us have the Toyota Center for next to nothing, and I like
to market with teams that are proactive like that. It’s a broad change
in attitude, from Me Generation to We Generation,” said Gallery Furniture
President Jim McIngvale. “Any property that’s involved in the community
and wants sponsors involved, too, is something I can latch on to. It helps the
community and it helps the cash register ring.”

Sears, Roebuck and Co. feels similarly. It instituted a $100 million American
Dream program a little over two years ago to help promote home ownership and
maintenance in needier communities, and it now has a program to support families
of enlisted people involved in the Iraq war who are also Sears employees. “We’ve
returned our attention to cause marketing,” said Touré Claiborne,
director of brand and partnership marketing for Sears.

The billboard shows some of the ways Carson Pirie Scott markets its store brands through its sponsorship with the Packers.

Examples of retailers asserting the strength of their positioning in the marketplace
are everywhere. Three of Carson Pirie Scott’s store brands — Boston
Store, Herberger’s and Younkers — created their own line of activewear
around two Green Bay Packers players this past season, right alongside the Reebok
duds they carried in 24 stores. The Packers are the company’s only major
sponsorship.

The stores also developed proprietary activewear brands and logos for Javon
Walker (J-Walk) and Nick Barnett (Defiant 56), and marketed them along with
an in-school program involving a raffle that students entered in store. Barnett
and Walker will make 24 visits this year to winning schools around the state.

Although the clothing line didn’t do as well as the store’s Reebok
offerings, which did “enormously well,” according to Christine Knippel,
vice president of special promotions and publicity, they did well enough for
another run next season, especially after wide receiver Walker’s break-out
year.

If there’s one area where retailers haven’t followed manufacturers,
it’s in venue naming rights. Currently only four of the roughly 70 major
league sports venues with title sponsors have retailers as those sponsors —
Target, Office Depot, Staples and Petco — probably because while retailers
are focusing more on brand-building, they usually don’t need the high-cost
blitz of a naming deal. They have more immediate dollars-and-cents concerns.

But if this area starts to follow other areas of sports marketing, we’ll
see naming-rights deals for retailers during this decade. Chances are it will
depend on whether the deal involves enough latitude to market vendor partners
and to do it the sponsor’s way. Because retailers are starting to expect
the upper hand.